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10 Mar 2003 : Column 113—continued

9.13 pm

Mr. Raynsford: I beg to move, That the Bill be now read the Third time.

The Bill has been extensively debated in Committee, on Report last Wednesday and today, and on Second Reading in January. We have had a wide range of interesting, detailed debates on the large number of varied subjects that are the characteristic of the Bill, which covers an enormous range of issues of concern to local government.

This is an important deregulatory measure that extends significant new freedoms and flexibilities to local authorities, as well as removing unnecessary red tape and bureaucracy. The new prudential regime, which provides for a fundamental change in the capital borrowing powers of local authorities and introduces new freedom and flexibility for authorities to undertake capital projects, has been widely welcomed. Indeed, local government is particularly keen for the Bill to be enacted in time for those measures to be introduced from April 2004. There are other important new

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freedoms, such as new powers for local authorities to charge for discretionary services and to trade. The better a local authority's performance, the more freedom it will have.

New ways in which local authorities can work in partnership with business to improve the environment for their local community are being made possible through the Bill's provisions on business improvement districts. Businesses will also benefit from the new financial incentives being given to authorities to promote business growth, and we are making life easier for small businesses through provisions for small business rate relief.

We have had the opportunity to make important reforms on topical issues of real concern to hon. Members. In particular, this evening's debate on section 28 demonstrated that there is a substantial majority in favour of abolition. That was confirmed by the votes in the House tonight and in Committee: there was an overwhelming majority in favour of reform in both. I regret that the Leader of the Opposition chose to vote against that important reform, which will remove an offensive piece of legislation that causes deep concern to many people in this country.

We have also made important changes in relation to the fire service, with reforms designed to focus on outputs and outcomes in terms of saving lives and preventing injury. Our objective is to provide a new fire service that is properly related to modern circumstances and in which local decisions can inform the development of the service to respond to local needs. That is our objective not only for the fire service, but for all local services.

In the words of the Local Government Association,

"the proposals in the Bill represent significant new freedoms for local councils and will help them deliver improved services to their communities."

I believe that the Bill will be seen as another important step in improving opportunities for local authorities to deliver high-quality services to their communities. Our objective is to help local authorities to do more and to do better, recognising the huge importance of the services that they perform. I commend the Bill to the House.

9.17 pm

Mr. Clifton-Brown: At the start of our consideration on Report, we had only 24 minutes in which to discuss four important groups of amendments, which dealt with important topics such as staff transfer matters, including terms and conditions and issues relating to the Transfer of Undertakings (Protection of Employment) Regulations 1981, and local authority charging and trading. We had hardly any time, and we dealt with only one group of amendments. That is an affront to democracy, and the business managers, especially those on the Government side, must look into it.

It is unacceptable to our constituents that large chunks of the Bill have not been discussed. For example, in a letter sent on 3 January to my hon. Friend the Member for Brentwood and Ongar (Mr. Pickles), Mr. Doug Benjafield, the managing director of Cleanaway, a firm in my hon. Friend's constituency, said of charging and trading:

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"It seems to us that Clause 95 could jeopardise the whole process of competitive tendering by enabling such authorities to set up what would be an 'in-house' company to retain or take over certain functions or services".

He continued:

"If local authority 'best value' companies are able to cream off successful undertakings, there is a real danger that private sector companies will find it uneconomic to bid for some of the less profitable services, and 'best value' will simply cease to operate in practice."

Perhaps the Minister would like to intervene, given that the subject has not been discussed by hon. Members, either in Committee or on the Floor of the House.

Mr. Benjafield asks several questions:

"First, how does the concept of 'best value' local authorities being able to set up companies to carry out certain functions or services tie in with the process of competitive tendering?


Second, what safeguards does the Government intend adopting to ensure that such companies do not receive preferential treatment? Will they be obliged to compete with private sector companies on a 'best value' basis for each contract? How will the Minister ensure a level playing field if they do and will the same criteria be used to assess their performance as is currently used for private sector companies?"

Those are important questions. Perhaps the Minister will assist the House and facilitate proper consideration of the Bill by answering those questions in a letter to me, and placing a copy in the Library.

Mr. Raynsford: I will try to help the hon. Gentleman by giving an instant response. The whole thrust of the legislation is to improve local authorities' ability to work with business, among other groups. We discussed business improvement districts, growth incentives and a range of other measures designed to encourage good relations between local authorities and business. However, we also aim to improve local authorities' efficiency and effectiveness.

I am surprised that the hon. Gentleman should be suggesting on behalf of the official Opposition that they oppose the idea of giving power to local authorities that can trade well in services that they deliver efficiently. Are they saying that those authorities should be prevented from doing so? Surely we should all welcome greater efficiency on the part of local authorities delivering services.

Mr. Clifton-Brown: I am grateful to the Minister for his explanation. I raised the matter on Second Reading, and we think that there could be an element of unfair competition affecting private sector companies facing publicly subsidised councils carrying out their own functions. [Interruption.] Perhaps the Minister will undertake to see a delegation from Cleanaway with my hon. Friend the Member for Brentwood and Ongar; that would be extremely helpful—and he is nodding his head.

Mr. Edward Davey: Will the hon. Gentleman give way?

Mr. Clifton-Brown: I shall give way, but only once.

Mr. Davey: Does the hon. Gentleman agree that if there were proper safeguards in respect of accounting practices, his concern could be easily dismissed?

Mr. Clifton-Brown: We did not have time to discuss the matter thoroughly, and I am not sure that the hon.

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Gentleman is right. Cleanaway is one of the best run waste disposal companies, and I am grateful to the Minister for agreeing to see a delegation with my hon. Friend the Member for Brentwood and Ongar. Let us see whether we can clear up some of the problems. That would be helpful.

The Bill materially alters the capital finance regime for local authorities. There is the combination of pooling capital rights and the botched handling of the withdrawal of local authority social housing authority grant. I gather that local authorities, despite all our protests, have not yet been notified of the withdrawal of that grant. The message to debt-free authorities from the Bill and from the Government is that the writing is on the wall.

That, combined with the controversial measure for the repayment of overhanging debt, for which £800 million is allocated this year for highly indebted authorities in the north—in effect to provide them with a bribe to ensure that they transfer their housing authority stock and have the debt paid off at the same time—is a massive transfer of local authority finance from the south to the north.

There are other measures in the Bill that we think are deleterious, too. For example, there are the alterations to the non-domestic rating regime. There is the fact that the regime has to be self-financing in each financial year. Transitional relief will have to be paid for within each financial year. Underfunded under-phasing will take place for businesses, large and small, that have lower revaluations. That will put them at a disadvantage.

Combining all that with a transfer of subsidy from the housing revenue accounts of authorities that are in surplus and well run to authorities in a negative position is a swingeing measure of financial redistribution. I am not sure how much some tenants in the south, who will be subsidising tenants of poorly run councils in the north, will like this provision.

Perhaps the most controversial measure of all is the amendment to the council tax regime. The Bill heralds regular revaluations for council tax, together with the extension of the number of council tax bands, with no relationship between the top and bottom bands. This will turn what used to be a relatively small item of household expenditure into an extremely significant item, unrelated to the ability to pay.

I came across some statistics in preparation for yesterday's television programme on the council tax. One third of all the pension increases that pensioners have received during the past six years of the Labour Government will be soaked up in the increases in council tax that the Government have imposed. That is a shocking statistic. When we introduced the tax, it was part personal and part property. It is now becoming a pure property stealth-wealth tax, and there is no relationship between what people pay and their ability to pay. In combination with the acknowledged additional council tax supplement for all the regional bodies that the Government are to introduce, that will mean an extremely nasty stealth tax—one of the biggest that the Government have introduced.

There are some measures in the Bill that we welcome, including prudential borrowing. Provided that it is done with safeguards, that is wholly in line with our policy of devolving policy down to the lowest possible level, and

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is an example that can be followed. With reservations, we support the BID—business improvement district—regime, although it is probably limited in effect. In America, such schemes are low value, and work well because the rating system is based on property tax. In Committee we explored the way in which benefit may accrue to property owners, while tenants and lessees will pay.

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